Good morning, ladies and gentlemen, and welcome to Monro Inc.'s Earnings Conference Call for the First Quarter of Fiscal 2020. At the time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, ladies and gentlemen, this conference call is being recorded and may not be reproduced in whole or in part without permission from the Company. I would now like to introduce Ms. Maureen Mulholland, Senior Vice President, General Counsel and Secretary at Monro. Please go ahead.

Thank you. Hello, everyone, and thank you for joining us on this morning's call. Before we get started, please note that as a part of the call this morning, we will be referencing a presentation that is available on the Investors section of our website at corporate.monro.com/investor/investor-resources. If I could draw your attention to the Safe Harbor statement on Slide 2 of the presentation, I would like to remind participants on this morning's call, that our presentation includes some forward looking statements about Monro's future performance. Actual results may differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Monro's filings with the SEC and in our earnings release. The Company disclaims any intention or obligation to update or revise any Forward-Looking Statements whether as a result of new information, future events or otherwise except as required by law. Additionally, on today's call, management's statements include a discussion of certain non-GAAP financial measures. Reconciliations of such supplemental information to the comparable GAAP measures will be included as part of today's presentation. With that, I would like to turn the call over to our President and Chief Executive Officer, Brett Ponton. Brett?

Thank you Maureen, and good morning everyone. Thanks for joining us today. I am pleased to kick off our new fiscal year with our sixth consecutive quarter of comparable store sales growth. Our ability to deliver sustainable growth despite more difficult comparisons and unfavorable weather conditions in certain regions reflects our focus on driving operational excellence and consistent execution across our organization. In line with our plans, we continue to make significant progress towards the execution of our Monroe forward strategy, which positions us well to capitalize on the continued momentum in our business. Before diving into our first quarter performance, I would like to thank our teammates whose outstanding work and commitment remain key to our success as we continue to scale our platform for growth. As illustrated on Slide 3, we began fiscal 2020 with solid top line growth, achieving a comparable store sales increase of 0.8% which marked our second consecutive quarter of positive comps on top of positive comps in the prior year period when adjusted for days. This has happened for the first time since the third quarter of fiscal 2011. In line with what we discussed on our last earnings call, we saw accelerated comp sales performance in April as we entered the spring service selling season, but experienced temporary softness in May and to a lesser extent June mainly due to cold and wet spring weather in certain regions. We are encouraged that comparable store sales recovered towards the end of the quarter despite facing tougher year-over-year comparisons and we are pleased to report that we have seen continued improvement into July with comparable store sales up approximately 1% month-to-date. Our positive first quarter comparable store sales performance was driven by higher average ticket, reflecting strong in-store execution as well as sustained momentum…

Thank you, Brett. And good morning everybody. Turning to Slide 7, we delivered solid top line performance and margin expansion in the first quarter. Sales increased 7.2% year-over-year to a record $317.1 driven by a same store sales increase of 0.8% and sales from new stores of $19.6 million including $16.6 million from recent acquisitions, partially offset by a decrease in sales from closed stores of approximately $0.7 million. The first quarter of fiscal 2020 had 90 selling days in line with the previous year period. Gross margin increased 80 basis points to 40.4% in the first quarter of fiscal 2020, from 39.6% in the prior year period. This increase was largely due to the continued benefits from the optimization of our store staffing model and product and service offerings as well as from leverage from higher comparable store sales, partially offset by the impact of sales mix from the free service tire acquisition. Operating expenses for the quarter increased $7.6 million and were $91.8 million or 28.9% of sales as compared with $84.2 million or 28.5% percent of sales in the prior year period. The year-over-year dollar increase includes expenses from 87 net new stores. Our operating income for the first quarter was $36.4 million which increased by 10% as compared to operating income of $33.1 million for the same quarter last year, and increased as a percentage of sales from 11.2% to 11.5%. Net interest expense for the quarter increased $0.6 million as compared to the same period last year. Weighted average debt outstanding for the first quarter of fiscal 2020 increaed by approximately $18 million as compared to the prior year period. The increase is primarily related to an increase in finance lease debt reported in connection with our fiscal 2020 acquisitions and Greenfield expansion. The weighted…

Thanks, Brian. In summary, we had a solid start to the year. We delivered our sixth consecutive quarter of comparable store sales growth, driven by improving execution across our business and are pleased to see this continue through July. Our Monro Forward initiatives are progressing on schedule and we firmly believe the strong traction of our re-imaged location underscores the success of our strategy. Importantly, we are continuing to execute our disciplined acquisition strategy and we are making solid progress integrating our new West Coast operations. Looking ahead, we are confident in our outlook for fiscal 2020 and we believe our commitment to operational excellence coupled with the execution of our growth strategy will drive continued value for our shareholders. With that, I will now turn the call over to the operator for questions.

Thank you. [Operator instructions] Thank you. Your first question comes from Brian Nagel, Oppenheimer. Go ahead, please.

Hi, good morning.

Good morning, Brian.

Congrats on the continued progress on your reposition. The first question I want to ask just on top line, maybe a couple of parts to it, but you discussed obviously sales in the fiscal first quarter and then sales quarter-to-date in fiscal Q2. So as we look at that I guess let's call it July performance. Is Monro still facing external pressures from weather or other factors? So I'm getting that is -- that 1% should we think about that is a decent run rate or is that still being held by the external factors? And the second question I have for you -- relatively early in the year, you've trimmed some -- somewhat you are not too dramatically, but somewhat your sales guidance for the year, how should we interpret that? It's just you're thinking towards the overall environment is what's your internal initiatives?

Sure. Brian, I’m going to start with, I think we don't like to talk about the weather in our business, of course, but I think it's difficult to ignore the fact there is a realistic impact that it has on the tire and out-of-service space. And first on our quarter one performance, pleased with how the quarter started in April and we came out of the gate pretty strong and we would characterize the weather backdrop is being very consistent with what we saw last year in April, which was kind of a slow start to the spring selling season. It continued into May, first that -- I mean throughout May, end of June as we had led -- as we think about July going forward, and as it relates to our guidance for the year, as we think about our business first half, second half, we knew coming into this year that are comparable, our comps were a little bit harder in the first half of the year and get progressively easier in the second half. So although we didn't provide quarter-to-quarter guidance this year, as you know. We were fully expecting a little bit harder start to the year and as our initiatives mature, we get more stores reimage, which we're pleased with the performance of that. We feel pretty confident in our full-year guidance and the comp sale guidance we provided today is basically a reflection of our first quarter softness that we had talked about.

Okay. I got it. And then if I could follow up with a I guess, a longer-term or bigger picture question. Clearly we discussed this lot in the past. Your acquisitions are a key part of the Monro strategy. You continue to push forward successfully with your acquisition strategy. The question I have though was given what I have -- just what -- I think most of us consider again putting backdrop of space and now you're pushed into new geographies such as California. Has your -- has the historic range of most of [Indiscernible] changed much or are you still paying basically the same you had historically for these acquired change?

Kind of details in terms of exact multiples that we pay for competitive reasons, of course, but I would characterize it very -- even the values that we're paying to clients there consistent with what we paid historically. We haven't seen measurable appreciation in terms of values that we're seeing. We're very pleased with our entry point in California in particular to acquire a platform in three distinct DMAs with a distribution center at multiples in line with historical averages. We feel pretty good about it. But I look at our pipeline, going forward, I would reiterate what I said last quarter and that's -- this is the most robust pipeline that I've seen since I've been at Monro. And a part of that is, given the fact we've opened up new geography, of course, and deeper South, as we push West and with our West Coast operations that certainly opens the door for a much more robust pipeline. And so we're very pleased with where we're at, how well we're positioned, how quickly we integrated the West Coast operations and have built I think an infrastructure here at our headquarters. It gives me confidence that we can scale this more rapidly.

Thanks a lot and congrats again.

Thank you, Brian.

Thank you. Your next question comes from Bret Jordan from Jefferies. Go ahead please.

This is Mark Jordan on for Bret. Good morning.

Hi, Mark.

Just thinking about your re-image stores, how did they outperformed compared to the company average? Do you have the comp difference there?

We didn't provide details on exactly that. As I mentioned in our prepared remarks, we're very pleased with the performance of the stores, they did significantly outpace the company average. But the reason why we're not going to provide any more detail on that yet, Mark is, if you look at the number of stores that we've kind of completed to this point, it's in the neighborhood of low 40s, with a small sample size like we're seeing and combined efforts across the true reimage along with a pilot market on rebranding, given the small sample size, we're reluctant to kind of get ahead of ourselves if you will and share information, I think it's just not reflective yet of a full-blown rollout. So but having said that, I think we're very encouraged by what we're seeing so far. If I look at the customer satisfaction metrics, which I think are a leading indicator on future traffic trends. We're very encouraged by that. And the outsized performance that we're seeing it in the collective store base relative to our company average is very encouraging as well.

Right. And is that outperformance carrying over into July as well?

To date, yes, it is.

Okay. And we're opening up in three additional markets in this current quarter, are you able to disclose what those markets might be?

We'll disclose the region, we're doing three markets in the Midwest region for reimage and maybe just to provide a little more color on that. Our focus has been leveraging the analytic tool that we've installed in our business to help us prioritize the markets where we believe through a reimaged/rebranding initiative will provide the biggest lift to our sales performance, so needless to say, we are certainly prioritizing in the markets where we feel like we have the best opportunity to do that. And in this particular case, it's going to take us to the Midwest. The other consideration that drives the decisions is certainly weather, we want to move them to Midwestern markets and Northern markets while we still have whether to paint the exteriors of buildings and will redirect our focus as the winter months come around to our Southern markets. And as always, we got to be conscientious I think of acquired stores, because we certainly want to immediately put those stores on the Monro Playbook as well as rebrand them to Monro banner as quickly as possible.

Okay, perfect. Thank you very much. And one quick housekeeping question for Brian, are you able to provide the monthly comp breakdown?

Yes, sure. We were up four in April, down one in May and flat in June.

All right. Thank you very much.

Thanks, Mark.

Thank you. [Operator Instructions] There are no further questions at this time. I would now like to turn the floor back over to Brett. Go ahead, please.

Thank you all for joining us today and for your interest and support of Monro. Our first quarter performance demonstrates our continued focus on driving operational excellence and delivering the consistent 5 star experience to all our customers. We are excited about the prospects across the business for the remainder of the year and look forward to updating you on our continued progress next quarter. Have a great day.